Gulfstream Rides On Wings Of Prosperity

The Gulfstream G450/550 plant harks back to how aircraft were made in the 1950s and 1960s. When filled with workers, the facility is somewhat cramped, work areas are littered with paper forms and manuals and noise from rivet guns echo throughout–a complete contrast to the newer G650 production facility.

Gulfstream Aerospace continues to build on its momentum of last year with deliveries of 39 completed aircraft during the first quarter, a 34.5-percent increase on Q1 2013. This is on the back of a total of 144 deliveries last year, a 53.2-percent rise from the company’s performance for 2012.

Meanwhile, Gulfstream’s $7.354 billion in billings reported to GAMA last year bested that of Bombardier by more than $1 billion and alone accounted for nearly one third of the combined 2013 billings from the 31 aircraft manufacturers that report delivery and billing data to GAMA. And there appears to be no stopping this growth, as Gulfstream billings in the first quarter climbed to $2.054 billion, up from $1.508 billion in the same span last year.

It is no secret that the primary driver of this momentum is Gulfstream’s flagship G650, deliveries of which started in December 2012. The $65 million business jet is in such high demand that its backlog extends four years and the handful of G650s placed on the pre-owned market not only have been snapped up quickly by buyers, but also have commanded premiums of approximately $7 million over the new aircraft price.

“This is currently the only business jet with a premium in the used market that I’m aware of,” Teal Group aerospace analyst Richard Abouafia told AIN. “Gulfstream has a five-year head start over Bombardier’s Global 7000, which won’t enter the market until 2017. It’s almost unheard of for anyone to have this kind of market all to themselves for this long.”

Beyond its robust market demand, the G650 has also brought Gulfstream (Booth 7061) into the 21st Century in terms of aircraft manufacturing, increasing production efficiency and, correspondingly, profit margins. When it launched the new airplane in 2008, the U.S. manufacturer wanted the G650 to represent a model for more efficient production, as well as easier maintainability.

According to Joe Lombardo, executive vice president of the aerospace business group at Gulfstream parent company General Dynamics, “The G650 is built using state-of-the-art manufacturing techniques.” He said that well before any metal was ever cut, the effort began with computerized 3D modeling to reduce the parts count by half over its other large-cabin models, and to improve maintainability.

The end result was aircraft that had no fit problems during the build process, starting with the very first test aircraft. “We normally have problems with the wing-to-body attachments on new aircraft models because the tolerances are so tight,” Lombardo said. “But we were pleasantly surprised during the first test G650’s wing mating since all the holes lined up perfectly. It took our build team only an hour to complete the first G650 wing mate.”

Manufacturing Advances

Regarding manufacturing efficiencies, Lombardo cited metal bonding as one of the key technology drivers to reduce production time and costs. “With bonded panels,” he noted, “We limit the amount of fasteners used. This speeds up the production process greatly.” The G650 also has a lot of single-piece parts milled from billets, keeping the parts count down.

Other production-line technologies being used on the G650 include automated riveting machines and wheeled tooling that travels with the subassemblies as the aircraft comes together down the production line. In fact, the overhead crane in the factory is used only once on each G650 during the production process–during the fuselage to wing mate.

What Gulfstream has done exceeds General Dynamics’ initial expectations. G650 production is currently tracked by JetNet iQ managing director Rollie Vincent at 44 aircraft per year, which is already 11 aircraft more than General Dynamics executives believed was the maximum output back in 2009. Without specifying the current G650 output, a Gulfstream spokesman told AIN that the plant is currently not running at its fullest capacity, meaning production could still be increased.

During AIN’s recent tour of Gulfstream’s Savannah campus, the differences between the adjacent G650 and G450/G550 production facilities was literally like that between night and day. The 200,000-sq-ft G650 facility was extremely quiet and had relatively few workers on the floor putting aircraft together on the parallel production lines. Workspaces were spacious and devoid of paper, replaced by clusters of computers that workers used for reference and documentation during the production process.

Next door at the G450/550 plant, the sounds of rivet guns echoing throughout nearly drowned out the voice of the spokesman next to me, who noted, “This is exactly how aircraft back in the 1950s and 1960s were built.” The factory floor was bustling with employees, while cramped workspaces were littered with engineering drawings, whiteboards and various papers.

In spite of this outdated manufacturing process, demand for the G450 and G550 remains strong. In fact, General Dynamics chairman and CEO Phebe Novakovic said last month that 60 percent of Gulfstream’s order intake during the first quarter was for the G450 and G550. And in the fourth quarter of 2013, China’s Minsheng Financial Leasing placed a 60-aircraft order with Gulfstream estimated at about $3 billion, the bulk of which is for G450s and G550s.

But there is trouble looming on the horizon for the legacy large-cabin Gulfstreams. The $45 million Dassault Falcon 5X, announced in October at the NBAA Convention, took direct aim at the G450. The 5X, which is expected to enter service in 2017, offers a range of 5,200 nm, 700 nm more than the G450, and a 98.4-inch cabin cross section that largely matches that of the G650, Gulfstream’s widest jet. Striking another blow, Dassault launched a Falcon 7X derivative (8X) here at EBACE that similarly challenges the G550.

“But don’t think for a minute that Gulfstream is idly sitting by,” business aviation analyst Brian Foley told AIN. “Gulfstream has plans to respond to Dassault, but it’s a balancing act as to when you make an announcement. Too soon, and you hurt sales of your existing products; too late, and it appears you’re hastily reacting to the market.”

In this case, Foley believes Gulfstream made a good choice to wait to see what Dassault came out with first. “Then Gulfstream can tweak its new products to be even better than these competitors,” he said, adding that he expects Gulfstream to announce its G450 and G550 successors “after EBACE and as late as NBAA” this year.

J.P. Morgan aerospace analyst Joseph Nadol III also believes that Gulfstream will “soon announce a major product transition from the G450/550 to a new family derived from the G650.” The new-product announcements are “likely in the second half,” he said, adding that he believes deliveries of the new models will begin in 2016.

Foley also anticipates that any such G450 and G550 successors to be based on the G650, allowing for a “Lego-like platform” for Gulfstream. “I also expect future Gulfstreams to share systems and production methods with the G650,” he said–further bringing the company into the 21st Century.